Question

What is the return on revenue for 2016?

What is the receivables turnover ratio for 2016?

		Dec. 31, 2016
Revenues
Company sales		$ 6,622
Franchise fees and income		130
Total revenues		6,752
Costs and Expenses, Net
Food and paper		1,919
Payroll and employee benefits		1,432
Occupancy and other operating expenses		2,259
Company restaurant expenses		5,610
General and administrative expenses		424
Franchise expenses		71
Closures and impairment expenses, net		78
Refranchising gain, net		(15)
Other income, net		(56)
Total costs and expenses, net		6,112
Operating Profit		640
Interest income, net		11
Changes in fair value of financial instruments		21
Income Before Income Taxes		672
Income tax provision		(158)
Net income (loss) – including noncontrolling interests		514
Net income (loss) – noncontrolling interests		12
Net Income (Loss) – Yum China Holdings, Inc.		$ 502
Basic Earnings (Loss) Per Common Share		$ 1.36
Diluted Earnings (Loss) Per Common Share		$ 1.36
Consolidated and Combined Balance Sheets - USD ($) $ in Millions
		Dec. 31, 2016
Current Assets
Cash and cash equivalents		$ 885
Short-term investments		79
Accounts receivable, net		74
Inventories, net		268
Prepaid expenses and other current assets		120
Total Current Assets		1,426
Property, plant and equipment, net		1,647
Goodwill		79
Intangible assets, net		88
Investments in unconsolidated affiliates		71
Other assets		254
Deferred income taxes		162
Total Assets		3,727
Current Liabilities
Accounts payable and other current liabilities		971
Income taxes payable		33
Total Current Liabilities		1,004
Capital lease obligations		28
Other liabilities and deferred credits		252
Total Liabilities		1,284
Redeemable Noncontrolling Interest
Equity
Common stock, $0.01 par value; 1,000,000,000 shares authorized; 383,344,835.42 shares issued and outstanding at December 31, 2016		4
Treasury stock		(20)
Additional paid-in capital		2,352
Retained earnings(a)	[1]	40
Parent Company Investment(b)	[2]
Accumulated other comprehensive income		1
Total Equity – Yum China Holdings, Inc.		2,377
Noncontrolling interests		66
Total Equity		2,443
Total Liabilities, Redeemable Noncontrolling Interest and Equity		$ 3,727

Answer 1

Part 1 - Return on Revenue Calculation - The ratio helps in determining the profitability of company. Higher the ratio is favourable

Return on Revenue = (Net Income/Revenue)*100

Net income = $502

Revenue = $6622

Return on Revenue = ($502/$6622)*100 = 7.58%

Part 2 - Receivables Turnover - The ratio helps in determining how well the company is managing its Receivables. Higher the ratio means lower uncollected money remaining and lower ratio means huge amount of money is not collected

Assume all sales are on credit. Since Data of year 2015 is not given, Receivables of 2016 will be considered instead of average receivables.

Receivables Turnover = Credit Sales/Average Accounts Receivables

Credit sales = $6622

Receivables = $74

Receivables Turnover = $6622/$74 = 89.49